Gus Sauter Warns Investors to Plan for a Long Life

One of the most crucial things to consider if you’re approaching or in retirement is “estimating how long you’ll live,” writes former Vanguard chief investment officer George U. “Gus” Sauter in a recent Wall Street Journal article.

Sauter says he’s surprised by how many people underestimate their longevity. Using the most recent analysis of life expectancy (the Social Security Administration’s 2013 Period Life Table), Sauter argues that if you’re 50 years old, “your life expectancy is 83 for a woman and 80 for a man,” but the average can be misleading, he says. According to the Social Security Administration, he notes, 30% of all 50-year-old women and 19% of similar aged men are expected to see their 90th birthday.

“So it’s best to plan to live longer and adjust accordingly,” writes Sauter. “That may mean saving more, not only in your 50s and 60s, but in your 20s and 30s.” He adds, “a rough rule of thumb for spending in a given year is to spend no more than 3% of one’s retirement assets at the end of the previous year.”